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Speaker 1: Welcome to Fear and Greed Q and A where we

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Speaker 1: ask an answer questions about business, investing, economics, politics and more.

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Speaker 1: Oh Michael Thompson and good morning Sean Ale.

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Speaker 2: Good morning Michael, Sean.

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Speaker 1: We are only a few days away from Christmas now, and

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Speaker 1: so we've got a question today that combines both Christmas

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Speaker 1: and investing, so it feels very very appropriate. A Santa rally?

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Speaker 2: Ah, yes, is it real?

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Speaker 1: What is it? Can we expect to see one? Well,

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Speaker 1: three questions there? I'm saying there's a lot in that,

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Speaker 1: So what is it?

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Speaker 2: The idea behind the Santa rally is that equities do

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Speaker 2: pretty well, particularly in Australia around Christmas because people just

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Speaker 2: feel good, you know, it's sort of the happy thing

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Speaker 2: about Santa being around, and people tend to buy rather

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Speaker 2: than sell.

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Speaker 1: Is it really a sentiment based it's.

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Speaker 2: Sentiment based primarily. Wow. There's also arguments that well, actually

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Speaker 2: you get more retail investors rather than institutional investors. Retail

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Speaker 2: investors tend to sell more than they sorry, just tend

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Speaker 2: to buy more than they sell, so you get a

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Speaker 2: bit of a rally because there's more retail money in

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Speaker 2: the market. So there's all sorts of theories about whether

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Speaker 2: or not well exactly what it is, but sentiment is

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Speaker 2: primarily kind of the way to look at it. Is

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Speaker 2: it real? If you look at the all lords total

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Speaker 2: return average monthly return over thirty years, April is the

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Speaker 2: best month. The second next best month is December. Over

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Speaker 2: forty years, December again the second best month of the

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Speaker 2: July equal second as well. So does that mean then

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Speaker 2: that it is more prevalent in Australia because in say

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Speaker 2: the US, right obviously at Christmas is at the same time,

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Speaker 2: but it isn't that extended kind of break away from

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Speaker 2: the office that we have in Australia, So institutional investors

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Speaker 2: aren't away from the office as much as they are here. Yeah,

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Speaker 2: I mean, I wouldn't overplay that. So there is a

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Speaker 2: Santa Claus rally in the US as well, it's just

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Speaker 2: that no one really knows why. You could also say

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Speaker 2: in Australia November it tends to be a bit of

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Speaker 2: a weaker month. You tend to have shareholder meetings and

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Speaker 2: stuff like that. Now, so November in recent times has

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Speaker 2: been a great month, but over the long period it's

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Speaker 2: been like forty years, so it's been a run of

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Speaker 2: the worst months. So if November is not such a

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Speaker 2: good month, does it rebound in December? Maybe that's another reason.

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Speaker 2: You know, I'm sort of fluffing around a little bit

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Speaker 2: here because Santacaus rally doesn't make much sense, but it

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Speaker 2: happens in Australia, and it does happen in the US

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Speaker 2: to a lesser extent. In the US, I have this

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Speaker 2: thing called sill in Maine go away, So it's the

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Speaker 2: equivalent in the US is their holiday season is Dune July,

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Speaker 2: so ours is December January. This is June July. And

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Speaker 2: the whole idea is just get rid of your stocks,

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Speaker 2: forget about them, and you come back after your holidays.

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Speaker 2: It's kind of the equivalent selling main go away that

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Speaker 2: reflects May in Dune weakness. And there's some sort of

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Speaker 2: truth that that, particularly in US markets and in Australian markets,

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Speaker 2: I mean, they are tied anyway. There's also I mentioned September,

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Speaker 2: the September swoon, and that's a tendency of markets to

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Speaker 2: dip in September. So I have, like the Santa Claus rally,

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Speaker 2: there's selling main go away, the September swoon plenty going on.

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Speaker 1: Okay, you have taught me over a long time that

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Speaker 1: the trend is your friend, right, and so that you

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Speaker 1: see these happening over a long period of time, which

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Speaker 1: is why they are accepted as kind of traditions or

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Speaker 1: patterns within the market.

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Speaker 2: Right.

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Speaker 1: But that doesn't seem there's not a lot of science

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Speaker 1: behind it, is there that that particularly if say that

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Speaker 1: the Santa Claus rally is sentiment based and just based

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Speaker 1: on people feeling good and kind of all of these

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Speaker 1: bits and pieces and no one big thing that drives

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Speaker 1: it every year consists, that means that there is the

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Speaker 1: potential for it not to happen.

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Speaker 2: But that's just investing. I mean, investing dry is driven

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Speaker 2: on sentiment. People think, oh wow, the AI boom is

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Speaker 2: on let's buy data centers, you know, let's buy chip companies.

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Speaker 2: And that's real. And so the senecal is really in

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Speaker 2: a sense is real because people just feel good. It's

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Speaker 2: there are lots of buying and selling in global markets,

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Speaker 2: in equity markets that is irrational. When we had the

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Speaker 2: great Roger Montgomery in during the week and he was

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Speaker 2: talking about the story of you know you have it,

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Speaker 2: was it the Lamborghini versus the VW Combi and you know,

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Speaker 2: the lamb Aghani wins, it always wins, it wins, it wins.

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Speaker 2: But at some point you go, I reckon, this is

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Speaker 2: the time that the VW comby is going to going

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Speaker 2: to beat the Lamborghini, right, And you know it's not

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Speaker 2: going to happen, but you do it anyway because that's irrational.

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Speaker 1: Irrational and human behavior to want to back an underdog

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Speaker 1: and the hope that it's going to come through, even

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Speaker 1: though you know it's not going.

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Speaker 2: To put money a horse at fifty to one as

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Speaker 2: if you're never going to win it, but you know,

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Speaker 2: you like the name or something rather and markets are

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Speaker 2: probably a bit more rational than that. But in that

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Speaker 2: sentiment feeling good, why not buy? Why not invest?

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Speaker 1: Oh, I've considering this has only been five minutes. I've

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Speaker 1: learned a heck of a lot in just five minutes

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Speaker 1: this morning, Sean, Thank you very much.

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Speaker 2: Thanks Michael.

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Speaker 1: Now, if you've got a question that you'd like us

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Speaker 1: to tackle, send it through on LinkedIn, Instagram, Facebook, or

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Speaker 1: at Fearandreed dot com dot are you?

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Speaker 2: Oh?

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Speaker 1: Michael Thompson's Fear and Breed Q and a